Xero in on Xero; Beat The Clock

by

1099s are due by January 31st (yes, 1099-MISC, I’m looking at you). So often we find ourselves in a crunch during this month to meet the filing deadline. Maybe you just haven’t found the time while closing the books to get these lists completed. Perhaps it is a last-minute client asking for your assistance. Xero’s 1099 feature makes getting these done on a tight deadline a breeze.

Sometimes knowing how to get started is half the battle. Start by creating a group for all “Contractors” that consist of all vendors who performed a service for the Company during the calendar year.

Follow the arrows to lead you to properly setting up a Contractor Listing:

Did you know that Xero has a 1099 report built into the platform to identify which vendors require 1099s? For this report to populate correctly, start by creating rules in the company Xero account. Xero allows 12 rules during set up of the 1099 report that can assist in identifying these vendors. You might be thinking, '12 seems like A LOT of rules.' But to be honest, our team finds that 2 general rules are used as a best practice in our firm. Here is list of those general rules.

Xero will automatically filter out any vendors or expenses paid by credit card. This is not a rule that needs to be established. Xero already has this as a built-in feature. SWEEET, RIGHT?

Xero Pro Tip: One thing to be sure to review on a more detailed level are all advertising and rent expenses. These are the most frequently forgotten 1099s.

Here are a few 1099 general rules that I would be remiss not to mention:

  1. Filings must include any payments issued to independent contractors by means of cash, check, ACH or tech stack bill payment feature (e.g. Bill.com).
  2. Include any vendors with payments over $600 in a calendar year.
  3. As the rules above note, identify the 1099 box the expense would be reported. Whether Box 1 for Rent expenses or Box 7 for “Services performed by someone who is not your employee”

Now that the list for clients are collected. The next step is to ensure W9s are collected and information is updated. While there seems to be an ease of pulling together the list of 1099s thanks to Xero technology, collecting necessary W9s can be the most time intensive part of the process. Be sure to contact vendors early and frequently, until they comply with W9 requests. At High Rock, we encourage clients not to issues payments without the W9s, but we all know how well that works!

Utilizing all these features in Xero will assist in making 1099 filing more efficient, effective and overall more enjoyable. For our team, it has been such a benefit to overall ease during the busiest time of the year. Work Away!

**Publisher's Adendum - efile4Biz is offering our readers a 25% discount on their print, mail and efile service.  Yes they have a XERO plug in, so you can export your data and they do the work for you.  Use discount code FWS25 at checkout - www.efile4Biz.com

Author Bio: Cheryl Sadolfo is an Accounting Guru at High Rock Accounting. Her backstory includes some heroic time auditing for large traditional public accounting firms, a CPA license, and a specialization in nonprofit accounting. Cheryl joined High Rock to assist with #CPAWorldDomination and has been helping grow the practice for over a year (while she also had an adorable baby boy). You can find her on Linkedin or follow her on Twitter: @highrockcpas.